Intel Said to Be Asking $500 Million for Pay-TV Unit

By Andy Fixmer, Ian King and Scott Moritz -
Nov 26, 2013

Intel Corp. (INTC) is asking about $500
million for OnCue, the online pay-TV service that the world’s
largest chipmaker developed before dialing back its ambitions,
according to people with knowledge of the process.

Intel is seeking to secure a sale by year-end, said the
people, who asked not to be identified because the talks are
private. One suitor, Verizon Communications Inc. (VZ), has begun
talking with owners of broadcast and cable channels about terms
for a streaming TV service, the people said.

A sale that meets Intel’s asking price would let the
company recoup its costs as it retreats on a plan to enter the
pay-TV business, while still supplying chips to the new owner.
Samsung Electronics Co. (005930) and Liberty Global Ltd. (LBTYA) also met with
Intel, people said earlier. Intel’s TV efforts slowed under
Chief Executive Officer Brian M. Krzanich, who took the reins in
May and has focused on getting chips into mobile devices.

Laura Anderson, a spokeswoman for Santa Clara, California-based Intel, declined to comment yesterday, as did Bob Varettoni, a spokesman for New York-based Verizon.

OnCue is able to provide pay-TV programming over any high-speed Internet connection, making it a threat to cable-TV
services that deliver shows over dedicated lines installed by
territory. Intel developed a system that includes servers, set-top boxes and applications that stream content to phones and
tablets.

Bigger Footprint

Verizon, one of the biggest U.S. phone and wireless
operators, runs the FiOS fiber-optic pay-TV service that
competes with cable companies. OnCue would let Verizon sell pay-TV outside the current FiOS footprint. The company has been
asking media companies if a streaming service would require new
contracts for shows, or whether existing FiOS TV agreements
could be amended to include the additional rights, the people
said.

Intel fell 0.4 percent to $23.65 at the close in New York.
The stock has climbed 15 percent this year. Verizon was little
changed at $50.05. It has advanced 16 percent this year.